Mortgage rates jumped higher this week, with the 30-year rate increasing seven basis points to 7.15%. Fixed rates increased across the board, while adjustable mortgage rates decreased or stayed about the same.
Here are the current mortgage rates, without discount points unless otherwise noted, as of June 29:
- 30-year fixed: 7.15% (up from 7.08% a week ago).
- 20-year fixed: 7.24% (up from 7.08% a week ago).
- 15-year fixed: 6.58% (up from 6.52% a week ago).
- 10-year fixed: 6.74% (up from 6.61% a week ago).
- 5/1 ARM: 6.1% (down from 6.12% a week ago).
- 7/1 ARM: 6.23% (up from 6.22% a week ago).
- 10/1 ARM: 6.43% (down from 6.45% a week ago).
- 30-year jumbo loans: 7.22% (up from 7.15% a week ago).
- 30-year FHA loans: 6.27% with 0.05 point (up from 6.19% a week ago).
- VA purchase loans: 6.53% with 0.05 point (up from 6.48% a week ago).
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“The supply-demand dynamic is pushing prices higher and underscoring the return of historical seasonality. These trends point toward a new balance in real estate, especially with mortgage rates keeping a steady pace for 10 consecutive months.”
– George Ratiu, chief economist of Keeping Current Matters
Covering the housing market for the past few years has been like riding a roller coaster that defies gravity. Mortgage rates, home prices and housing costs have been climbing to stomach-churning heights as speculators brace for a speedy plunge back to earth. But every time we think we’ve reached the peak, there’s only a modest downward dip. Instead of returning to safe ground, we’re left suspended in midair.
This is the new reality facing homebuyers today, with affordability well beyond reach, especially for first-timers. Current homeowners have the advantage of record-low mortgage rates and housing payments – and even if they do want to sacrifice these perks by selling their home, they’re able to tap into their inflated equity to help fund their next home purchase.
While the golden handcuffs effect has kept existing-home inventory low, increased new home construction has begun to relieve some of that pressure. New home sales are at their highest point in more than a year “as buyers seek alternatives to a small supply of existing properties,” Ratiu says.
But newly constructed homes aren’t a feasible option for all buyers. New builds are typically larger and more expensive than existing homes, not to mention that many new developments are located in the suburbs, farther away from city centers where zoning laws restrict new construction.
The median size of a new construction home sold in 2022 was 2,383 square feet, with a median sales price of $457,800, according to the Census Bureau. Meanwhile, the median size among all homes for sale in 2022 was around 1,800 to 1,900 square feet, and the median existing-home sales price was $386,300, per data from Realtor.com and the National Association of Realtors.
So far in 2023, builders have been taking note of the need for more affordable new construction homes. The median price of new construction single-family homes sold in May was $416,300, which is more in line with May’s median existing single-family home sales price of $401,100. It’s a step in the right direction, but the market is still far from balanced.
“Despite this encouraging news, there remains an urgent need for more homes at the most affordable price points, where the shortage of available inventory is most severe,” says Realtor.com economist Jiayi Xu.
On top of that, housing costs will remain high as long as mortgage rates are around 7%. And while rates aren’t expected to fall below 3% anytime soon – perhaps never again – we could see some relief by year-end. Mortgage rates are expected to gradually decline through the end of 2023 and beginning of 2024, which could give buyers (and sellers) the wiggle room they need to jump back into the market.
